NAT. AUTOMATIC SPRINKLER IND. PENSION FUND v. AM. A. FIRE PROT.

• Decision Date: 13 January 1988
• Docket Number: Civ. No. JFM-86-3613.
• Citation: 680 F. Supp. 731
• Parties: TRUSTEES OF the NATIONAL AUTOMATIC SPRINKLER INDUSTRY PENSION FUND, et al. v. AMERICAN AUTOMATIC FIRE PROTECTION.
• Court: U.S. District Court — District of Maryland

680 F. Supp. 731

TRUSTEES OF the NATIONAL AUTOMATIC SPRINKLER INDUSTRY PENSION FUND, et al. v. AMERICAN AUTOMATIC FIRE PROTECTION.

Civ. No. JFM-86-3613.

United States District Court, D. Maryland.

January 13, 1988.

Kenneth M. Johnson, Rockville, Md., for plaintiffs.

Eric Hemmendinger, Baltimore, Md., Robert L. Rediger, Sacramento, Cal., for defendant.

MEMORANDUM

MOTZ, District Judge.

Plaintiffs, the trustees of several multi-employer employee benefit plans, claim that defendant failed to make contributions to the plans pursuant to prehire agreements into which defendant had entered with the United Association of Plumbers and Pipefitters, Sprinkler Fitters Local 669 ("Local 669") and the Sprinkler Fitters and Apprentices Local Union 483 ("Local 483"). The action is brought under Sections 502 and 515 of the Employee Retirement Income Security Act, 29 U.S.C. Sections 1132, 1145 (1982), and under Section 301 of the Labor-Management Relations Act, 29 U.S. C. Section 185(a)(1982).

Defendant has moved for partial summary judgment. The motion raises several issues, including two of rather broad importance: (1) whether or not the rule adopted by the National Labor Relations Board in John Deklewa and Sons, 282 N.L.R.B. No. 84 (February 20, 1987), prohibiting unilateral repudiation of a prehire agreement should be given retroactive effect in a Section 301/ERISA action, and (2) whether, if that rule is not to be applied retroactively, the trustees of union benefit plans may recover under pre-Deklewa law for payments allegedly due to them after an employer's repudiation of a prehire agreement, despite the absence of a timely challenge to the repudiation before the NLRB.

BACKGROUND

Defendant was signatory to a series of prehire agreements, authorized by Section 8(f) of the National Labor Relations Act, 29 U.S.C. Section 158(f) (1982), with Local 669 and Local 483. These agreements adopted master agreements between the union and a multi-employer bargaining unit of which defendant was a part. Defendant was obligated under these agreements to contribute to the employee benefit plans of which plaintiffs are the trustees scheduled payments for each hour worked by defendant's employees who were covered by the agreements. The agreement between defendant and Local 669 covered the period from April 1, 1982 through March 31, 1985. There were two agreements between defendant and Local 483; by their terms, they were effective from August 1, 1981 through July 31, 1984 and from August 1, 1984 until July 31, 1987, respectively.

On November 29, 1985, defendant sent a letter to Local 483 expressly repudiating the prehire agreement then in effect. In response, Local 483 brought an action in the Federal District Court for the Eastern District of California, seeking a declaratory judgment that defendant was still bound by the agreement. On May 7, 1987, the Court dismissed the action for lack of subject matter jurisdiction. Local 483 did not appeal the dismissal.

On July 7, 1986, counsel for Local 483 had written counsel for plaintiffs in this action. He stated that, in reviewing documents in connection with the California suit, he had discovered that defendant had been doing non-union work five months prior to its repudiation of the 8(f) agreement, and he inquired if the trustees would be interested in bringing an action against defendant for back payments due for non-union workers as to whom defendant had not made payments to the pension funds. This suit was instituted on December 1, 1986.¹

DISCUSSION

Retroactivity of the Deklewa Rule Prohibiting Unilateral Repudiation of 8(f) Agreements

Although the letter from Local 483's counsel to the trustees' counsel appears to suggest only that the trustees bring an action for back payments due prior to defendant's repudiation of the 8(f) agreement, the trustees also have asserted claims in this action not only for pre-repudiation payments but also for payments due after the repudiation (on November 27, 1985) through July 31, 1987, the expiration date set forth in the repudiation agreement. Their first argument in support of this claim is based upon the NLRB's Deklewa decision.²

A series of rules had developed under pre-Deklewa law establishing what was, in effect, a protocol for the resolution of majority status disputes arising under prehire agreements. At its inception, an 8(f) agreement was simply a "preliminary step that contemplated further action for the development of a full bargaining relationship." Ruttmann Construction Co., 191 N.L.R.B. 701, 702 (1971). At this stage the agreement conferred no presumption of majority status for the union, and either party could repudiate it at any time for any reason. If an employer did repudiate the agreement, the union could then litigate its status in an 8(a)(5) proceeding by filing an unfair labor practice charge with the NLRB.³ If the Board determined that the union had attained majority status at any time during the life of the 8(f) agreement, the agreement would be deemed to have been "converted" into a binding collective bargaining agreement, fully enforceable under the Labor Management Relations Act. Further, if the Board found that the union had attained majority status and that the repudiation had therefore constituted an unfair labor practice, it could have included in the relief which it granted an award of all payments which the employer had failed to make under the 8(f) agreement after repudiation.

In Deklewa, the Board changed these rules. An employer no longer has the right to repudiate unilaterally an 8(f) agreement. If a union's majority status is challenged, the only way that it can be tested is by a Board-conducted election prompted by a petition filed under Section 9(c) of the National Labor Relations Act, 29 U.S.C. Section 159(c) (1982). In the interim, the employer is required to comply with the terms of the 8(f) agreement, including the making of all payments due thereunder.

In Deklewa, the Board determined that the anti-repudiation rule should be applied retroactively to all cases pending before the Board at any stage. In making this determination, the Board had to balance various competing factors. On the one hand, the Board had to consider the potential unfairness to employers of imposing upon them additional obligations and liabilities to which they were not subject when they entered into 8(f) agreements under pre-Deklewa law. On the other hand, the Board had to take into account the public interest in immediately implementing more effectively the policies of promoting employee free choice and labor relations stability underlying the Labor Management Relations Act. Likewise, the Board was concerned about being "required for an indefinite period of time to perpetuate the administrative and litigational difficulties entailed in application of arcane current law to all pending 8(f) cases." Deklewa, 282 N.L.R.B., slip op. at 42.

Since Deklewa, two courts have decided the question of whether the anti-repudiation rule should be applied retroactively in non-administrative litigation. One of these courts decided that it should be applied retroactively, the other that it should not. Compare National Elevator Industry Welfare Plan v. Viola Industries, Inc., ___ F.Supp. ___, No. 84-2286-S (D.Kan. May 6, 1987) (LEXIS, Genfed library, Dist. file) with Construction Industry Welfare Fund v. Jones, 672 F.Supp. 291 (N.D.Ill. 1987); see also Mesa Verde Construction Co. v. Northern California District Council of Laborers, 820 F.2d 1006 (9th Cir. 1987), reh'g en banc granted, prior opinion withdrawn, 832 F.2d 1164 (9th Cir. 1987).

This Court is of the view that, in a Section 301/ERISA action such as this, pre-Deklewa repudiations should not be held to have been void. This conclusion is based not upon any disagreement with the balance struck by the Board in Deklewa but upon fundamental differences between the two contexts in which retroactive application of the rule is sought. The Board's decision in Deklewa, given the circumstances there present, was entirely reasonable. Although there inevitably is a degree of unfairness whenever rules are changed midstream, it makes sense to rule, as the Board did, that the new and better rules should be applied immediately to all 8(f) agreements presently in effect and in all cases where an 8(f) agreement has been recently repudiated and in which an election to test the union's majority status can now be held.⁴ The interests of uniformity, clarity, ease of application and effective promotion of fundamental statutory policies all dictate that result. However, the considerations relevant to determining whether the anti-repudiation rule should be applied retroactively in Section 301/ERISA cases are quite different.

First, it is analytically unsound to consider the rule in a vacuum. It must be understood against the background of the overriding principle enunciated in Deklewa from which it is derived: that majority status disputes arising under 8(f) agreements should be resolved by election rather than by litigation. In the present case, as in all cases involving strictly historical disputes, a representation election can no longer be effectively held. Thus, to apply the anti-repudiation rule retroactively would be to give only selective retroactive effect to the Deklewa holding.

Second, it is in cases such as this that the unfairness to employers of retroactive application of the anti-repudiation rule is most manifest. If the rule were to be applied retroactively, employers would be subjected to a penalty for having taken action which was entirely lawful under pre-Deklewa law without being afforded the opportunity to have their assertion of the union's lack of majority status tested either by election or by litigation. Cf. Construction Industry Welfare Fund v. Jones, supra at 294.

Third, none of the interests which the Board properly found to compel retroactive application of the...